COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 229
(By Senators Tomblin (Mr. President) and Caruth,
By Request of the Executive)
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[Originating in the Committee on Finance;
Reported 26, 2010.]
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A BILL to amend and reenact §18-9D-4b, §18-9D-6 and §18-9D-8 of the
Code of West Virginia, 1931, as amended, all relating to
authorizing the School Building Authority to issue bonds in
the maximum aggregate amount of $500 million outstanding at
any time; authorizing the School Building Authority to receive
and expend federal subsidies received with respect to bonds
issued by the School Building Authority; requiring copies of
resolutions authorizing revenue bonds be provided to Governor,
President and Speaker; and making technical corrections.
Be it enacted by the Legislature of West Virginia:
That §18-9D-4b, §18-9D-6 and §18-9D-8 of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 9D. SCHOOL BUILDING AUTHORITY.
§18-9D-4b. School Building Authority authorized to issue bonds and
pay debt service on bonds with funds distributed from State
Excess Lottery Fund.
The School Building Authority is expressly authorized to issue
bonds and pay debt service on bonds pursuant to the provisions of
this article with funds distributed from the State Excess Lottery
Fund under section eighteen-a, article twenty-two, chapter
twenty-nine of this code and deposited into the Excess Lottery
School Building Debt Service Fund
and any federal subsidies
received by the School Building Authority and deposited into the
Excess Lottery School Building Debt Service Fund with respect to
bonds authorized by this section.
§18-9D-6. School Building Capital Improvements Fund in State
Treasury; School Construction Fund in State Treasury; School
Building Debt Service Fund in State Treasury; School
Improvement Fund in State Treasury; collections to be paid
into special funds; Excess Lottery School Building Debt
Service Fund in State Treasury; authority to pledge the
collections as security for refunding revenue bonds; authority
to finance projects on a cash basis.
(a) There is continued in the State Treasury a School Building Capital Improvements Fund to be expended by the authority as
provided in this article. The School Building Capital Improvements
Fund shall be an interest-bearing account with interest credited to
and deposited in the School Building Capital Improvements Fund and
expended in accordance with the provisions of this article.
The School Building Authority may pledge all or any part of
the revenues paid into the School Building Capital Improvements
Fund that are needed to meet the requirements of any revenue bond
issue or issues authorized by this article prior to the twentieth
day of July, one thousand nine hundred ninety-three, or revenue
bonds issued to refund revenue bonds issued prior to that date,
including the payment of principal of, interest and redemption
premium, if any, on the revenue bonds and the establishing and
maintaining of a reserve fund or funds for the payment of the
principal of, interest and redemption premium, if any, on the
revenue bond issue or issues when other moneys pledged may be
insufficient for the payment of the principal, interest and
redemption premium, including any additional protective pledge of
revenues that the authority in its discretion has provided by
resolution authorizing the issuance of the bonds or in any trust
agreement made in connection with the bond issue. Additionally,
the authority may provide in the resolution and in the trust
agreement for priorities on the revenues paid into the School
Building Capital Improvements Fund that are necessary for the protection of the prior rights of the holders of bonds issued at
different times under the provisions of this article.
Any balance remaining in the School Building Capital
Improvements Fund after the authority has issued bonds authorized
by this article and after the requirements of all funds, including
reserve funds established in connection with the bonds issued prior
to the twentieth day of July, one thousand nine hundred
ninety-three, pursuant to this article have been satisfied may be
used for the redemption of any of the outstanding bonds issued
under this article which by their terms are then redeemable, or for
the purchase of the bonds at the market price, but not exceeding
the price, if any, at which the bonds are in the same year
redeemable and all bonds redeemed or purchased shall immediately be
canceled and shall not again be issued.
The School Building Authority, in its discretion, may use the
moneys in the School Building Capital Improvements Fund to finance
the cost of projects authorized in accordance with the provisions
of section sixteen of this article on a cash basis. Any pledge of
moneys in the fund for revenue bonds issued prior to the twentieth
day of July, one thousand nine hundred ninety-three, is a prior and
superior charge on the fund over the use of any of the moneys in
the fund to pay for the cost of any project on a cash basis:
Provided, That any expenditures from the fund, other than for the
retirement of revenue bonds, may only be made by the authority in accordance with the provisions of this article.
(b) There is continued in the State Treasury a special revenue
fund named the School Building Debt Service Fund into which shall
be deposited the amounts specified in section eighteen, article
twenty-two, chapter twenty-nine of this code
together with any
federal subsidies received by the authority with respect to bonds
authorized by this article for which moneys deposited in the School
Building Debt Service Fund have been pledged. If the amounts
deposited in the School Building Debt Service Fund exceed the
amount which the authority is authorized to expend, the excess
shall be set aside in a special surplus fund for the authority.
Expenditures from this special surplus fund shall be made only in
accordance with the procedures established in section eighteen,
article two, chapter eleven-b. All amounts deposited in the fund
shall be pledged to the repayment of the principal, interest and
redemption premium, if any, on any revenue bonds or refunding
revenue bonds authorized by this article for which moneys deposited
in the School Building Debt Service Fund have been pledged by the
authority:
Provided, That deposited moneys may not be pledged to
the repayment of any revenue bonds issued prior to the first day of
January, one thousand nine hundred ninety-four, or with respect to
revenue bonds issued for the purpose of refunding revenue bonds
issued prior to the first day of January, one thousand nine hundred
ninety-four. Additionally, the authority may provide in the resolution and in the trust agreement for priorities on the
revenues paid into the School Building Debt Service Fund that are
necessary for the protection of the prior rights of the holders of
bonds issued at different times under the provisions of this
article. On or prior to the first day of May of each year, the
authority shall certify to the State Lottery Director the principal
and interest and coverage ratio requirements for the following
fiscal year on any revenue bonds issued on or after the first day
of January, one thousand nine hundred ninety-four, and for which
moneys deposited in the School Building Debt Service Fund have been
pledged, or will be pledged, for repayment pursuant to this
section.
After the authority has issued bonds authorized by this
article for which moneys deposited in the School Building Debt
Service Fund have been pledged and after the requirements of all
funds have been satisfied, including coverage and reserve funds
established in connection with the bonds issued pursuant to this
article, any balance remaining in the School Building Debt Service
Fund may be used for the redemption of any of the outstanding bonds
issued under this article, for which moneys deposited in the School
Building Debt Service Fund have been pledged, which, by their
terms, are then redeemable or for the purchase of the outstanding
bonds at the market price, but not to exceed the price, if any, at
which the bonds are redeemable and all bonds redeemed or purchased shall be immediately canceled and shall not again be issued:
Provided, That after the authority has issued bonds authorized by
this article and after the requirements of debt service and all
associated funds have been satisfied for the fiscal year for which
moneys deposited in the School Building Debt Service Fund have been
pledged, including coverage and reserve funds established in
connection with the bonds issued pursuant to this article, any
remaining balance in the School Building Debt Service Fund may be
transferred to the School Construction Fund created in subsection
(c) of this section and used by the School Building Authority in
its discretion to finance the cost of school construction or
improvement projects authorized in accordance with the provisions
of section sixteen of this article on a cash basis.
(c) There is continued in the State Treasury a special revenue
fund named the School Construction Fund into which shall be
deposited the amounts specified in section thirty, article fifteen,
chapter eleven of this code, together with any moneys appropriated
to the fund by the Legislature.
Provided, That for the school year
beginning the first day of July, two thousand four, only, funds
from the excess lottery allocated in section eighteen-a, article
twenty-two, chapter twenty-nine of this code shall not be
transferred to the School Construction Fund and, in lieu thereof,
made available for legislative appropriation: Provided, however,
That for the school year beginning the first day of July, two thousand four, only, up to five million dollars of the amounts in
the fund may be appropriated by the Legislature for budget
shortfalls.
Expenditures from the School Construction Fund shall be for
the purposes set forth in this article, including lease-purchase
payments under agreements made pursuant to subsection (e), section
fifteen of this article and section nine, article five of this
chapter and are authorized from collections in accordance with the
provisions of article three, chapter twelve of this code and from
other revenues annually appropriated by the Legislature from
lottery revenues as authorized by section eighteen, article
twenty-two, chapter twenty-nine of this code pursuant to the
provisions set forth in article two, chapter five-a of this code.
Amounts collected which are found, from time to time, to exceed the
funds needed for purposes set forth in this article may be
transferred to other accounts or funds and redesignated for other
purposes by appropriation of the Legislature. The School
Construction Fund shall be an interest-bearing account, with the
interest credited to and deposited in the School Construction Fund
and expended in accordance with the provisions of this article.
Deposits to and expenditures from the School Construction Fund are
subject to the provisions of subsection (k), section fifteen of
this article.
(d) There is continued in the State Treasury a special revenue fund named the School Major Improvement Fund into which shall be
deposited the amounts specified in section thirty, article fifteen,
chapter eleven of this code, together with any moneys appropriated
to the fund by the Legislature. Expenditures from the School Major
Improvement Fund shall be for the purposes set forth in this
article and are authorized from collections in accordance with the
provisions of article three, chapter twelve of this code and from
other revenues annually appropriated by the Legislature from
lottery revenues as authorized by section eighteen, article
twenty-two, chapter twenty-nine of this code pursuant to the
provisions set forth in article two, chapter five-a of this code.
Amounts collected which are found, from time to time, to exceed the
funds needed for purposes set forth in this article may be
transferred to other accounts or funds and redesignated for other
purposes by appropriation of the Legislature. The School Major
Improvement Fund shall be an interest-bearing account, with
interest being credited to and deposited in the School Major
Improvement Fund and expended in accordance with the provisions of
this article.
(e) There is created in the State Treasury a special revenue
fund named the Excess Lottery School Building Debt Service Fund
into which shall be deposited the amounts specified in section
eighteen-a, article twenty-two, chapter twenty-nine of this code,
together with any federal subsidies received by the authority with respect to bonds authorized by section four-b, article nine-d,
chapter eighteen of this code. If the amounts deposited in the
Excess Lottery School Building Debt Service Fund exceed the amount
which the authority is authorized to expend, the excess shall be
set aside in a special surplus fund for the authority.
Expenditures from this special surplus fund shall be made only in
accordance with the procedures established in section eighteen,
article two, chapter eleven-b. All amounts deposited in the fund
shall be pledged, as designated by the authority, to the repayment
of the principal, interest and redemption premium, if any, on
revenue bonds or refunding revenue bonds authorized by section
four-b of this article. On or prior to the first day of May of
each year, the authority shall certify to the State Lottery
Director the principal and interest and coverage ratio requirements
for the following fiscal year on any revenue bonds issued for which
moneys deposited in the Excess Lottery School Building Debt Service
Fund have been pledged, or will be pledged, for repayment pursuant
to this section.
After the authority has issued bonds authorized by this
article for which moneys deposited in the Excess Lottery School
Building Debt Service Fund have been pledged and after the
requirements of all funds have been satisfied, including coverage
and reserve funds established in connection with the bonds issued
pursuant to this article, any balance remaining in the Excess Lottery School Building Debt Service Fund may be used for the
redemption of any of the outstanding bonds issued under this
article, for which moneys deposited in the Excess Lottery School
Building Debt Service Fund have been pledged, which, by their
terms, are then redeemable or for the purchase of the outstanding
bonds at the market price, but not to exceed the price, if any, at
which the bonds are redeemable and all bonds redeemed or purchased
shall be immediately canceled and shall not again be issued:
Provided, That after the authority has issued bonds authorized by
this article and after the requirements of debt service and all
associated funds have been satisfied for the fiscal year, including
coverage and reserve funds established in connection with the bonds
issued pursuant to this article for which moneys deposited in the
Excess Lottery School Building Debt Service Fund have been pledged,
any remaining balance in the Excess Lottery School Building Debt
Service Fund may be transferred to the School Construction Fund
created in subsection (c) of this section and used by the School
Building Authority in its discretion to finance the cost of school
construction or improvement projects authorized in accordance with
the provisions of section sixteen of this article on a cash basis.
(f) The Legislature finds and declares that the Supreme Court
of Appeals of West Virginia has held that the issuance of
additional revenue bonds authorized under the School Building
Authority Act, as enacted in this article prior to the twentieth day of July, one thousand nine hundred ninety-three, constituted an
indebtedness of the state in violation of section four, article X
of the Constitution of West Virginia, but that revenue bonds issued
under this article prior to the twentieth day of July, one thousand
nine hundred ninety-three, are not invalid.
The Legislature further finds and declares that the financial
capacity of a county to construct, lease and improve school
facilities depends upon the county's bonding capacity (local
property wealth), voter willingness to pass bond issues and the
county's ability to reallocate other available county funds instead
of criteria related to educational needs or upon the ability of the
School Building Authority created in this article to issue bonds
that comply with the holding of the West Virginia Supreme Court of
Appeals or otherwise assist counties with the financing of
facilities construction and improvement. The Legislature further
finds and declares that this section, as well as section eighteen,
article twenty-two, chapter twenty-nine of this code, had been
reenacted during the first extraordinary session of the West
Virginia Legislature in the year one thousand nine hundred
ninety-four in an attempt to comply with the holding of the Supreme
Court of Appeals of West Virginia.
The Legislature further finds and declares that it intends,
through the reenactment of this section and section eighteen,
article twenty-two, chapter twenty-nine of this code, to dedicate a source of state revenues to special revenue funds for the
purposes of paying the debt service on bonds and refunding bonds
issued subsequent to the first day of January, one thousand nine
hundred ninety-four, the proceeds of which will be used for the
construction and improvement of school building facilities. The
Legislature further finds and declares that it intends, through the
reenactment of this section and section thirty, article fifteen,
chapter eleven of this code and section eighteen, article
twenty-two, chapter twenty-nine of this code, to appropriate
revenues to two special revenue funds for the purposes of
construction and improvement of school building facilities.
Furthermore, the Legislature intends to encourage county boards to
maintain existing levels of county funding for construction,
improvement and maintenance of school building facilities and to
generate additional county funds for those purposes through bonds
and special levies whenever possible. The Legislature further
encourages the School Building Authority, the state board and
county boards
of education to propose uniform project
specifications for comparable projects whenever possible to meet
county needs at the lowest possible cost.
The Legislature further finds and declares that it intends,
through the reenactment of this section and section eighteen,
article twenty-two, chapter twenty-nine of this code, to comply
with the provisions of sections four and six, article X of the Constitution of West Virginia; and section one, article XII of said
constitution.
§18-9D-8. Use of proceeds of bonds; bonds exempt from taxation.
(a) The maximum aggregate
face value amount of bonds
that may
be issued by the authority outstanding at any time, for which the
moneys in the School Building Debt Service Fund or the Excess
Lottery School Building Debt Service Fund are to be pledged, is
$500 million;
however, any amount of bonds for which moneys have
been deposited in a sinking fund, reserve fund or other fund
established to provide payment of principal or interest on the
bonds shall be excluded from the calculation of the maximum
aggregate amount of bonds outstanding at any time. The issuance of
revenue bonds under the provisions of this article shall be
authorized, from time to time, by resolution or resolutions of the
School Building Authority,
copies of which shall be provided to the
Governor, the President of the Senate and the Speaker of the House
of Delegates within five days of their approval, which shall set
forth the proposed projects authorized in accordance with the
provisions of section sixteen of this article and provide for the
issuance of bonds in amounts sufficient, when sold as provided in
this section, to provide moneys considered sufficient by the
authority to pay the costs, less the amounts of any other funds
available for the costs or from any appropriation, grant or gift
for the costs:
Provided, That bond issues from which bond revenues are to be distributed in accordance with section fifteen of this
article for projects authorized pursuant to the provisions of
section sixteen of this article are not required to set forth the
proposed projects in the resolution. The resolution shall
prescribe the rights and duties of the bondholders and the School
Building Authority and, for that purpose, may prescribe the form of
the trust agreement referred to in this section. The bonds may be
issued, from time to time, in such amounts; shall be of such
series; bear such date or dates; mature at such time or times not
exceeding forty years from their respective dates; bear interest at
such rate or rates; be in such denominations; be in such form,
either coupon or registered, carrying such registration,
exchangeability and interchangeability privileges; be payable in
such medium of payment and at such place or places within or
without the state; be subject to such terms of redemption at such
prices not exceeding one hundred five percent of the principal
amount of the bonds; and be entitled to such priorities on the
revenues paid into the fund pledged for repayment of the bonds as
may be provided in the resolution authorizing the issuance of the
bonds or in any trust agreement made in connection with the bonds:
Provided, however, That revenue bonds issued on or after January 1,
1994, and prior to January 1, 2008, which are secured by lottery
proceeds from section eighteen, article twenty-two, chapter twenty-
nine of this code shall mature at such time or times not exceeding ten years from their respective dates:
Provided further, That
revenue bonds issued on or after January 1, 2008, which are secured
by lottery proceeds from section eighteen or eighteen-a, article
twenty-two, chapter twenty-nine of this code, shall mature at such
time or times not exceeding twenty years from their respective dates.
(b) The bonds shall be signed by the Governor,
and by the
president or vice president his or her designee or the vice chair
of the authority, under the great seal of the state, attested by
the Secretary of State, and the coupons attached to the bonds shall
bear the facsimile signature of the
president or vice president
Governor, his or her designee or the vice chair of the authority.
In case any of the officers whose signatures appear on the bonds or
coupons cease to be officers before the delivery of the bonds, the
signatures shall nevertheless be valid and sufficient for all
purposes the same as if the officers had remained in office until
the delivery. The revenue bonds shall be sold in the manner
determined by the authority to be for the best interests of the state.
(c) Any pledge of revenues made by the School Building
Authority for revenue bonds issued prior to July 20, 1993, pursuant
to this article is valid and binding between the parties from the
time the pledge is made; and the revenues pledged shall immediately
be subject to the lien of the pledge without any further physical
delivery of the revenues pledged or further act. The lien of the
pledge is valid and binding against all parties having claims of any kind in tort, contract or otherwise, irrespective of whether
the parties have notice of the lien of the pledge and the pledge
shall be a prior and superior charge over any other use of the
revenues pledged.
(d) The proceeds of any bonds shall be used solely for the
purpose or purposes as may be generally or specifically set forth
in the resolution authorizing those bonds and shall be disbursed in
the manner and with the restrictions, if any, that the authority
provides in the resolution authorizing the issuance of the bonds or
in the trust agreement referred to in this section securing the
bonds. If the proceeds of the bonds, by error in calculations or
otherwise, are less than the cost of any projects specifically set
forth in the resolution, additional bonds may in like manner be
issued to provide the amount of the deficiency; and unless
otherwise provided for in the resolution or trust agreement
hereinafter mentioned, the additional bonds shall be considered to
be of the same issue and are entitled to payment from the same
fund, without preference or priority, as the bonds before issued
for the projects. If the proceeds of bonds issued for the projects
specifically set forth in the resolution authorizing the bonds
issued by the authority exceed the cost of the bonds, the surplus
may be used for any other projects authorized in accordance with
the provisions of section sixteen of this article or in any other
manner that the resolution authorizing the bonds provides. Prior to the preparation of definitive bonds, the authority may, under
like restrictions, issue temporary bonds with or without coupons,
exchangeable for definitive bonds upon the issuance of the
definitive bonds.
(e) After the issuance of any revenue bonds, the revenues
pledged for the revenue bonds shall not be reduced as long as any
of the revenue bonds are outstanding and unpaid except under the
terms, provisions and conditions that are contained in the
resolution, trust agreement or other proceedings under which the
revenue bonds were issued.
(f) The revenue bonds and the revenue refunding bonds and
bonds issued for combined purposes, together with the interest on
the bonds, are exempt from all taxation by the State of West
Virginia, or by any county, school district, municipality or
political subdivision thereof.
(g) To meet the operational costs of the School Building
Authority, the School Building Authority may transfer to a special
revenue account in the State Treasury interest on any debt service
reserve funds created within any resolution authorizing the issue
of bonds or any trust agreement made in connection with the bonds
for expenditure in accordance with legislative appropriation or
allocation of appropriation.
(h) Any school construction bonds issued under this section
shall be issued on parity with any existing School Building Authority bonds previously issued under this article.
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